French connectionNuclear accord a milestone in
bilateral relationsTHE
civil nuclear cooperation agreement signed between India and France
during Prime Minister Manmohan Singh’s visit to that country marks a
new milestone in their bilateral relations. The agreement denotes
India’s new status as a member of the exclusive nuclear club, made
possible by the Nuclear Suppliers’ Group accepting its new-found
status at its last meeting in Vienna.

Kayani’s
generalsPak army changes were
inevitableEver
since General Pervez Musharraf gave up his uniform, it was
inevitable that the Pakistan Army top brass was in for a drastic
overhaul. The much-anticipated changes finally came about on Tuesday
when seven corps commanders were reshuffled and as many as 14 new
senior appointments were made. Needless to say, the beneficiaries of
the reshuffle are handpicked men of Army chief Ashfaq Parvez Kayani.

Crash
and carryUS fat cats resist pay
cutsNature
abhors a vacuum, and ideology is no exception to this rule.
Thus, state capitalism may collapse in some (socialist) countries only
to reappear in other (capitalist) countries. If there is no Union of
Soviet Socialist Republics (USSR) then its absence may well be made up
for the United Socialist States of America (USSA), which is rising
like a socialist phoenix from the capitalist ashes to which many of
the US financial firms were reduced.

Rumblings in PakistanZardari is indeed on a
slippery slopeby G. ParthasarathyWhen
the recently married Benazir Bhutto and Asif Ali Zardari hosted
a dinner for Prime Minister Rajiv Gandhi and Mrs Sonia Gandhi in
Islamabad in 1988, Mr Rajiv Gandhi came away with the impression that
whereas Benazir appeared nervous about the ISI having bugged the room
where she hosted her Indian counterpart, Asif Zardari struck him as a
person who was relaxed and uninhibited and “without any hangups
about India”.

Chill out, Chilli!by Raj MehtaI
first met Rajyavardhan (Chilli) Rathore in early 2003. Coming
out of Army Headquarters, I saw him striding in with the alert,
leonine gait of a born athlete, looking supremely fit in his uniform.
I introduced myself. “The Olympics are around the corner, Rathore,
and something in your body language tells me you’ll be on the
podium”.

Almost forgottenShastri’s
contribution is outstandingby Kuldip NayarI
DO not know why the centenary celebrations of Lal Bahadur Shastri’s
birthday were on a low key. They came to an end on October 2 three
years ago. The Central government allocated Rs 100 crore for the
celebrations but most of the amount remained unspent.

EU, India share
democratic valuesby Anita Inder SinghParadoxes
abound. India could be the fastest-growing economy in the world
in 2008-30, averaging annual expansion of 6.3 per cent. The ordinary
European, enjoying the social security benefits presented by the
welfare state, finds it hard to reconcile the extreme poverty of 25
per cent of Indians with the takeover by India’s financial wizards
of European giants such as Arcelor Steel, Corus and Land Rover.

Japan jolted by US
crisisby Blaine HardenWall
Street’s plunge jolted Japan on Tuesday, as dismal new data
here showed that the world’s second-largest economy, already
contracting, has almost certainly fallen into recession.

EDITORIALS

French connection
Nuclear accord a milestone in bilateral relations

THE civil nuclear cooperation agreement signed between India and France during Prime Minister Manmohan Singh’s visit to that country marks a new milestone in their bilateral relations. The agreement denotes India’s new status as a member of the exclusive nuclear club, made possible by the Nuclear Suppliers’ Group accepting its new-found status at its last meeting in Vienna. It is a quirk of fate that the 123 Agreement India signed with the US that facilitated India’s entry into the comity of the nuclear world had not covered the last lap — approval of the US Congress — when India and France signed the agreement. What stood in the way was the economic crisis in the US that engaged the full attention of the US legislature and the Bush administration. Otherwise, a similar tie-up with the US would have preceded the one with France.

India’s nuclear relations with France have been very old and mutually beneficial. In fact, India’s prime motive in signing the 123 Agreement is to exploit nuclear technology to meet the growing needs of power in the country. It could not have found a better partner in this than France which is the world’s number one country insofar as tapping nuclear energy for generating power is concerned. Even the US comes far behind France in this respect. As the Prime Minister mentioned in Paris, India does not see the agreement merely as a seller-buyer kind of deal because the two have a lot to share with each other in developing their technologies. Whether it is the defence deal or the nuclear agreement, the two countries see them as opportunities for joint production and transfer of technology.

Be it space technology or defence, India and France have strong and abiding relationship. When following Pokhran 1, the US withdrew from its contractual obligations, it was France that came to India’s rescue by supplying enriched uranium for the Tarapur Atomic Power Plant. Today India is known for its satellite launching capabilities but at one time it was to France that Indian-made satellites used to be taken for launching. In other words, India’s relationship with France has been time-tested. The extension of social security benefits to Indians working in France and the French working in India is one more sign of their enduring friendship.

Kayani’s generals
Pak army changes were inevitable

Ever
since General Pervez Musharraf gave up his uniform, it was inevitable that the Pakistan Army top brass was in for a drastic overhaul. The much-anticipated changes finally came about on Tuesday when seven corps commanders were reshuffled and as many as 14 new senior appointments were made. Needless to say, the beneficiaries of the reshuffle are handpicked men of Army chief Ashfaq Parvez Kayani. With his men dominating the new set of commanders, he will be able to run the army with a firmer grip. While all appointments at this level are vital, the most significant is the replacement of Lieut-Gen Nadeem Taj with Lieut-Gen Ahmad Shuja Pasha as the new ISI chief. General Taj was not only close to Musharraf to whom he is related too, he was also one of those generals the US did not approve of, mainly because of the ISI’s close links with the Taliban extremists and militant groups active along the Pakistan-Afghanistan border. The US had been pressing for his ouster and reforms in the ISI for quite some time.

Washington had enough evidence that the agency was also linked with the July 7 suicide bombing on the Indian embassy in Kabul that killed 58 persons. To that extent, the ouster of General Taj would be welcome to Indian establishment. But it would be futile to expect any major departure in the ISI’s policy of bleeding India as much as possible. If at all the ISI lessens its involvement with militants, it will be vis-à-vis USA in Pakistan’s North-West.

Earlier, President Asif Ali Zardari had tried to put the shadowy agency under the control of the interior ministry. But the move was withdrawn after a protest by military establishment. General Kayani himself ran the ISI till October last year. General Pasha can be depended on to operate the ISI the way Kayani wants. Another significant factor is the stability of the nuclear-powered Pakistan. The political set-up is very weak today and the military is likely to play an increasingly active role in the days to come, Kayani’s avowed aim to distance it from politics notwithstanding.

Crash and carry
US fat cats resist pay cuts

Nature
abhors a vacuum, and ideology is no exception to this rule. Thus, state capitalism may collapse in some (socialist) countries only to reappear in other (capitalist) countries. If there is no Union of Soviet Socialist Republics (USSR) then its absence may well be made up for the United Socialist States of America (USSA), which is rising like a socialist phoenix from the capitalist ashes to which many of the US financial firms were reduced. When it comes to the crunch, these uncompromising champions of free enterprise — who are opposed to the state playing any role in the market, except as its handmaiden – are now pleading to be rescued by the US government.

While the CEOs of US Inc have no qualms in asking the government to come to their aid, they are opposed to any restrictions on the fat pay packages they draw. The astronomical salaries of these CEOs may not be the cause of great economic deprivation. But the fact is that despite their deep pockets they could not safeguard, leave alone increase, the investments they were entrusted with. Now, while US citizens are facing the brunt of the economic meltdown, these same citizens as taxpayers find that a government they elected is more preoccupied with what is to be done for the corporate czars than the people who were their victims.

The House of Representatives may have rejected the bailout $ 700-billion financial package, but the issue of stratospheric CEO salaries that came to the fore in this context is still in public focus. He who pays the piper calls the tune, is what US taxpayers are reminding the government as well as the CEOs. If the sinking financial giants expect the government to help them out, then the CEOs should submit themselves to pay cuts dictated by the compulsions of the meltdown. Otherwise, as US Senators and Congressmen have pointed out, the authors of the calamity will walk away enriched, when they ought to be penalised. Presidential candidates Barack Obama and John McCain agree on few things. Yet both are agreed that there must be limits to the salaries of CEOs. This only goes to show that one country’s socialism is another country’s capitalism.

Rumblings in Pakistan
Zardari is indeed on a slippery slope
by G. Parthasarathy

When
the recently married Benazir Bhutto and Asif Ali Zardari hosted a dinner for Prime Minister Rajiv Gandhi and Mrs Sonia Gandhi in Islamabad in 1988, Mr Rajiv Gandhi came away with the impression that whereas Benazir appeared nervous about the ISI having bugged the room where she hosted her Indian counterpart, Asif Zardari struck him as a person who was relaxed and uninhibited and “without any hangups about India”. This was well before Benazir’s second term as Prime Minister, when Zardari assumed a higher ministerial profile and rightly or wrongly, earned the reputation of being Pakistan’s “Mr Ten Percent”.

Singapore’s senior statesman Lee Kwan Yew affectionately described Zardari as a “likeable rogue” who dwelt at length on his expertise on “real estate and export deals”. Whatever the truth about Mr Zardari’s alleged indiscretions, the fact remains that he suffered imprisonment and maltreatment by Nawaz Sharif and Musharraf, with fortitude and dignity. He emerged with charges against him still unproven.

Given the dynastic politics of the subcontinent, Zardari assumed charge of the Pakistan Peoples’ Party (PPP) when Benazir was assassinated. Since then, he has moved with consummate skill in outmanoeuvring (for the present) traditional rival Nawaz Sharif, dealing with contentious issues on restoration of members of the judiciary ousted by Musharraf and finally by ousting the unpopular Musharraf, in a manner that avoided rancour. By getting himself elected as President, however, Zardari has adorned himself with a crown of thorns. He has assumed office when inflation is at 25 per cent and Pakistan’s foreign exchange reserves, now estimated at $ 5.7 billion, are declining at around $ 1billion monthly, accompanied by shortages of essential commodities and unprecedented power cuts.

More dangerously, the writ of the Pakistan Government has ceased to exist in virtually the entire North West Frontier Province. One of Pakistan’s four Provinces is now under the control of radical pro-Taliban groups who have for long enjoyed the support of Pakistan’s powerful military establishment, spearheaded by the ISI. Taliban influence extends to the very doorstep of the capital, Islamabad.

Zardari’s visit to New York, where he met Prime Minister Manmohan Singh, was at a time of escalating tensions with Afghanistan, the United States and its NATO allies. Despite Pakistani denials, there is clear evidence that the ISI has been providing shelter to the Taliban political leadership in and around the Baluchistan capital Quetta, with the Taliban military leadership under figures like Jalaluddin Haqqani enjoy ISI patronage and support in the tribal areas of the NWFP.

The Pakistan army is unwilling to take on the challenge posed to Pakistani sovereignty in the NWFP by its Taliban protégés. Worse still, while the Pakistan army may be adept in promoting terrorism and low intensity conflict in India and Afghanistan, it is both unwilling and incapable of dealing with insurgencies on its own soil.

Whenever Pakistan’s much vaunted army has acted against pro-Taliban elements it has used excessive force, including helicopter gunships and F 16 fighters, causing avoidable civilian casualties. Moreover, having motivated its young officers and soldiers on the virtues of Jihad and extolled the Taliban for years, the army is finding its soldiers demoralised and unwilling to fight those they had been led to believe are pure “Ghazis”.

With the Pakistan Urdu media having become victim of ISI propaganda and given to extolling the Taliban and groups like the Lashkar-e-Taiba, Zardari is finding that public opinion in Pakistan is averse to military action against those regarded as terrorists, not just in Afghanistan and India, but indeed across the world. The Islamic parties and Nawaz Sharif’s Muslim League are set to exploit these developments.

In this background, Zardari has been compelled to balance moves to crack down on terrorists, by warning the Americans that they should not act militarily on Pakistani soil — a warning politely rejected by President Bush. American raids into Pakistan’s tribal areas are set to continue, whenever actionable intelligence necessitates such actions. Zardari also finds conventional wisdom propounded by the ISI and rabid newspapers like the Nawai Waqt Group that Pakistan should not promote Confidence Building Measures (CBMs) or trade and economic relations with India till the issue of Jammu and Kashmir issue is resolved according to its wishes, unrealistic and counterproductive.

He has, therefore, favoured the approach adopted by General Musharraf in his last years in office of promoting confidence-building measures and seeking new ways to address the issue of J&K. It, however, remains to be if Zardari shows the same regard for terrorist groups like the Lashkar-e-Taiba to promote low intensity conflict against India as General Musharraf did, or whether he is willing to challenge the army establishment to change its policies.

It is evident that General Kiyani and his colleagues will be averse to giving up long-term policies of attempting to dominate Afghanistan and destabilize India, by using radical Islamic groups as a tool for achieving these objectives. Even now, General Kiyani is giving fears of Indian intentions on Pakistan’s eastern borders as an excuse for avoiding the deployment of more troops on Pakistan’s western borders with Afghanistan. It would be worthwhile for New Delhi to propose CBMs to make it clear to the world that India has no intention of taking advantage militarily of Pakistan’s need for larger deployments on its western borders. But, New Delhi should be clear that in coming weeks, the ISI is going to spare no effort to disrupt elections politically and by use of militant groups, if elections are held soon in Jammu and Kashmir.

The various measures to promote trade and people to people contacts across the LoC in J&K and the international border, agreed to after the Zardari-Manmohan Singh meeting in New York are welcome. But one is shocked by the decision to discuss Pakistani involvement in the bombing of our embassy in the ill conceived “Joint Terror Mechanism.” It is evident that Prime Minister Manmohan Singh has chosen to give the ISI yet another opportunity to flatly deny any involvement in a terrorist outrage in which not only the Afghanistan Government, but US and NATO forces in Afghanistan, have enough evidence to establish direct ISI involvement.

Thanks to the Prime Minister’s ill advised move, the tragic deaths of Brigadier Ravi Mehta, Counsellor Rao and two jawans of the ITBP, will be consigned to the pages of history, as yet another instance of Indian naiveté and pusillanimity. Surely, the least India should do is to insist that the Afghan Government and its US and its NATO partners should jointly act, to declare the ISI as an international terrorist
organisation.

MIDDLE

Chill out, Chilli!
by Raj Mehta

I first
met Rajyavardhan (Chilli) Rathore in early 2003. Coming out of Army Headquarters, I saw him striding in with the alert, leonine gait of a born athlete, looking supremely fit in his uniform. I introduced myself. “The Olympics are around the corner, Rathore, and something in your body language tells me you’ll be on the podium”. Returning my handshake very firmly, he looked me in the eye and said quietly. “I won’t let India down, Sir.” His intensity as he said this remains etched in my mind.

When the silver moment came, getting through to Athens was not difficult from the phones of the Military Operations Directorate, but tracking the self-effacing “first ever” individual silver medalist for India was. We were destined to meet though — at an investiture ceremony at Rashtrapati Bhavan in April 2005, where both of us were invited. We hugged wordlessly — his warmth and self-effacing smile needed no amplification.

Our wives met too — one a former 800 metres national record holder, the other a loving, very supportive wife who had sacrificed enormously to help her man stand on the podium, with the National Flag proudly emblazoned around him.

Time went on. Made responsible for creating a state-of-the-art indoor shooting range at Srinagar’s Badami Bagh cantonment as part of the Rathore euphoria that swamped the Army and the nation, the system made light of my suggestion that it be named after him. Instead, a blowup of his award-winning podium moment was approved. Sitting far away at Rome, Rathore conveyed his silent thanks through his family, who were in India.

Rathore fought a long, lonely, frustrating battle for obtaining the high finance needed to fuel his training for Beijing. He was, at its end, accorded permission to endorse products, a break from past military practice. Tragedy however followed. His ‘silver’ winning weapon was lost in transit. He spent quality time adjusting to a new weapon; his performance declining in the bargain.

The cumulative stress of living up to heightened expectations, adjusting to the nuances of his new weapon, coping with failures in the run-up to Beijing took its toll. He failed.

Rathore was and will remain a pathfinder, a fact Abhinav graciously acknowledged after he shot for Gold. Abhinav combated his “slough of despond” at Athens by complimenting Chilli for his silver and promising to do one better.

This time around, the bells have tolled for Rathore. He must chill out, ruthlessly stamping out memories of Beijing. An officer and a gentleman, he must give Abhinav the bear hug he forgot at Beijing whenever they meet, and tell him that his inspiration for London 2012 will be Abhinav’s
Gold.

OPED

Almost forgotten
Shastri’s contribution is outstanding
by Kuldip Nayar

I DO not know why the centenary celebrations of Lal Bahadur Shastri’s birthday were on a low key. They came to an end on October 2 three years ago. The Central government allocated Rs 100 crore for the celebrations but most of the amount remained unspent.

No serious programme, except two speeches at Hyderabad and Bangalore and a few meetings, was undertaken. There was a proposal to have a documentary on his life. Books for children were also planned. Nothing seems to have taken off.

This is still better from the time when his photograph like that of K. Kamaraj would not be displayed in the main “pandal” of the Congress session. The mistake was rectified when pointed out. Still he did not get much prominence because he did not get into the triumvirate—Jawaharlal Nehru, Indira Gandhi and Rajvi Gandhi—the dynastic obsession.
However, Shastri’s contribution to the nation has been outstanding, although his tenure was cut short due to heart failure. The reason why he shied away from birthday celebrations was the presumption that he would look like a person trying to share limelight which rightly belonged to Mahatma Gandhi whose birthday (October 2) was on everybody’s lips. “I am nobody,” he told me. “I do not want to claim even an iota of glory which only Gandhiji epitomised.”

I was his press secretary when he became the Home Minister after Govind Vallabh Pant. I saw Shastri from close quarters and I can say without hesitation that his simplicity, modesty and transparency were the traits which only a few post-Independent leaders possessed.

He could hardly make the two ends meet with the salary he got either as an MP or as a minister. He lost a daughter at an early age because he could not afford medical expenses.

I recall how frugal he lived when he resigned from ministership under the Kamaraj Plan. He put off the lights all over the house except the one in the sitting room and the other in the kitchen on the day he quit the government.

Once I asked him why he did so because as a former minister he was entitled to the expenses on the lawns and other parts of the bungalow. He said the expense on electricity and water was his and not that of the government, which, no doubt, owned the bungalow.

I do not think such are the considerations with even former MPs, much less ex-ministers, some of whom continue to live in government accommodation and pay no electricity and water charges despite the government’s notices to vacate the place.

Shastri never contemplated that the lawmakers would be one day the law-breakers. However, Shastri had come round to accepting Jayaprakash Narayan’s proposition that the voters should have the right to recall their MPs or MLAs if they found his or her performance lacking. This is what Speaker Somnath Chatterjee has also suggested in a recent lecture.

Shstri’s views on foreign affairs, whether as the Home Minister or the Prime Minister, were pragmatic. What was there for India? This was the question he posed all the time. Maybe, he realised that after Nehru’s voice in the world affairs, his opinion would carry less weight. Or, maybe, he felt that the public wanted something indigenous when the impression about Nehru was that he was lost in world problems.

China and Pakistan were the two countries which drew his attention the most. He made no secret that he felt more comfortable with Pakistan. He would say that friendship with Pakistan was possible but not with China, which considered India as an archrival.

This is the reason why he preferred Swaran Singh to M.C. Chagla as Foreign Minister. Chagla, he feared, would be anti-Pakistan to prove his neutrality as a Muslim.

It is possible that Shastri would have brought the two countries closer because he sincerely believed that the two buried the hatchet at Tashkent where he signed a declaration of peace and friendship treaty with Pakistan. He did not live to see the effect of the Tashkent Declaration because he died 10 hours after signing it. I was still near the bed where Shastri’s body was lying when Gen Ayub Khan came to pay his homage. He said: Here lay a person who could have made the two countries strike friendship if he had lived.

Indeed, the news of Shastri’s death had spread all over, including Tashkent. The overwhelming silence that enveloped the route to the airport was broken only by muffled drums as the funeral procession—with Ayub as one of the pal-bearers—inched through the streets of Tashkent.

Friendly hands stretched towards us, the journalists, as we went along the road to catch a special plane. I could imagine there must be thousands of my countrymen waiting in Delhi to receive the coffin and have a last glimpse of the man, who, in 19 months, had left an imprint which was not very spectacular but was so very Indian.

To some, he might have appeared as a small man figuratively as he was physically. To the Leftists, he might have been a man “without conviction.”

But to many others his tenure might have been only a “parenthesis in the Indian history,” as T.T. Krishnamachari, the then Finance Minister, put it.

But then as Shastri would himself say: “Nobody can succeed Nehru. We can only try to carry on his work in a humble way.”

However, it was during his time that the Indian army, which had been humiliated at the hands of China in 1962, regained its self-confidence and rekindled national pride.

It was during his period that pragmatism had precedence over ideology. But his was too short a period for any impact. For 16 out of 19 months of his tenure, he remained vulnerable to the pressures and pulls in and outside the Congress. And it was a pity that he died just when he had gained the stature to withstand them.

EU, India share democratic values
by Anita Inder Singh

Paradoxes
abound. India could be the fastest-growing economy in the world in 2008-30, averaging annual expansion of 6.3 per cent. The ordinary European, enjoying the social security benefits presented by the welfare state, finds it hard to reconcile the extreme poverty of 25 per cent of Indians with the takeover by India’s financial wizards of European giants such as Arcelor Steel, Corus and Land Rover.

India’s population — 1.1 billion — is more than twice the size of the EU’s 495 million. India has 21 official languages — something inconceivable in many European states with a single official language.

As the EU gropes for common foreign policy in the latest post-Georgia world, what does this regional organisation, which is a political entity comprising 27 states, squabbling about the powers of its unelected bureaucracy as well as its foreign and security policy, share with a country as complex as India?

The Eighth EU-India Summit, held in Marseilles on September 29, confirmed the primacy of trade and investment in their relationship. Climate change, civil aviation and nuclear energy are also important issues for the EU and India.

Neither is the top foreign policy priority of the other. The US ranks first with both — and it is the key to India’s civil nuclear
programme.

The EU and India share democratic values and a vested interest in managing religious, linguistic and cultural diversity. For both a multipolar world is the reality. And both support the United Nations in its work on advancing peace and security.

At another level, officials in Brussels grumble about the arrogance of their Indian counterparts. New Delhi, meanwhile, perceives the splintered EU as lacking strategic vision and global clout, and finds it easier to conduct bilateral negotiations with larger European countries like Britain, France and Germany than with the patronising bureaucracy that leads the EU.

Much to New Delhi’s dismay, EU member-states disagree on a permanent place for India in the UN Security Council. Dissensions within the EU block the framing of a joint strategy with India on counter-terrorism and Afghan reconstruction. Those divisions also enable India to play one EU country against another on economic matters.

Currently India is the EU’s ninth largest trading partner (China its second largest). The US is India’s biggest market; China its leading supplier. Trade between India and the EU was € 56 billion in 2007. (€ 301 billion between the EU and China). Marseilles saw both sides working to increase two-way trade to € 100 billion over the next five years. Direct investment by the EU bloc is around € 11 billion .

India can offer the EU highly trained scientists and a skilled work force in the manufacturing and service sectors. For its part the EU wants India to further liberalise foreign direct investment in areas such as telecommunications and retail, improve infrastructure, open up the financial sector and relax labour laws.

India complains that in a globalised world, the EU’s professed interest in broadening business ties does not quite square with the restrictions of movement and residence imposed on highly skilled Indians by EU countries

Some Europeans are concerned that India does not always support the EU on human rights issues. But India does not regard human rights as a major concern in its ties with the EU. New Delhi conducts an annual human rights dialogue with local EU ambassadors.

However, India has noted the gap between European grandstanding on ending dictatorship in Myanmar and the fastidiousness with which EU member-states stop short of doing anything, which might harm the interests of their oil companies in Myanmar.

In 1992 India awarded the Nehru Award to Aung San Syu Kyi but a “regime change”, carried out by foreign powers, is not on New Delhi’s agenda.

Last but not the least, the EU and India know that democracy is about managing differences through dialogue. That is all to the good in a fast-changing world.

The writer is a professor at the Centre for Peace and Conflict Resolution in New Delhi

Japan jolted by US crisis
by Blaine Harden

Wall
Street’s plunge jolted Japan on Tuesday, as dismal new data here showed that the world’s second-largest economy, already contracting, has almost certainly fallen into recession.

Analysts said Japan’s troubles are likely to deepen as turmoil grows in the United States.

In Tokyo, nerve-rattling news from Wall Street dovetailed with the release of worse-than-predicted government figures showing that factory output and consumer spending fell sharply in August, as unemployment rose to a two-year high of 4.2 percent.

Japan’s economy started shrinking in the second quarter of this year, ending its longest period of sustained growth since World War II. A decline in the third quarter now seems certain, several economists said.

Car shipments to the United States nosedived in August, down 30 percent as Toyota, Honda and Nissan all cut production.

Exports, the main engine of growth in Japan’s phenomenal postwar rise, have stalled this year. That fizzle, together with high fuel and food prices, gave Japan a rare trade deficit in August. In trading Tuesday, Toyota fell nearly 5 percent and Sony was off by more than 6 percent.

How the Japanese government will — or can — respond to the contracting economy remains an open question.

Politically, the government, now under the leadership of its fourth prime minister in little more than two years, continues to struggle with a parliamentary deadlock.

Prime Minister Taro Aso, who assumed power last week, used his first speech to parliament on Monday to dress down the opposition Democratic Party of Japan for gumming up the government with political gamesmanship. Aso’s Liberal Democratic Party controls the lower house, while the opposition controls the upper house.

“The opposition thinks primarily of the political situation,” Aso said. “The lives of the people are a second or third priority.”

In a substantial break with his three predecessors as prime minister, Aso has announced plans to revive the economy by cutting taxes and increasing government spending.

Critics fear this will revive pork-barrel spending on unneeded dams, bridges and roads — a hallmark of the ruling party’s governing style in the 1990s and before.

Aso is also considering a “very large investment tax credit” to entice Japanese companies into borrowing money, making new investments and perking up employment, according to Richard Koo, chief economist at the Nomura Research Institute and an Aso adviser.

Unlike in the United States or Europe, banks and many major companies in Japan are awash in cash. There is more than $14 trillion in personal assets on deposit here. Money is widely available for borrowing at interest rates below 1 percent.